China's economy to maintain recovery trend in Nov-Dec, says NDRC

• Manufacturing PMI, services business activity rebound
  
  
• Investment in equipment grows 16.1% y-o-y in Jan-Oct
  
  

Mysteel Global: China's key economic indicators showed marginal improvement in October, and as the existing and incremental policies continue to take effect, economic performance is expected to maintain an upward trend in November and December, said Li Chao, Deputy Director of Policy Research Office of National Development and Reform Commission (NDRC), the state economic planner.

There are a growing number of positive factors in economic operations, increased market confidence, and improved expectations among businesses, with key indicators, such as the manufacturing purchasing managers' index (PMI) and the services business activity index returning to the expansion zone, indicating stronger production and investment intentions among enterprises, she said.

Looking ahead to 2025, China's economic development still enjoys abundant favourable conditions and support, Li said.

China's large market offers significant untapped potential, and for example, further urbanisation could drive trillions of yuan in new investment demand and over RMB 200 billion ($27.6 billion) in additional consumption for every percentage point increase in the urbanisation rate, Li observed.

As the final year of the 14th Five-Year Plan, 2025 will see the effective implementation of major reforms and projects, and meanwhile, ample policy room and tools, coupled with enhanced macroeconomic coordination, are expected to provide strong support for stable economic growth, she said.

For 2024, two key drivers have supported economic growth, namely large-scale equipment renewals and consumer goods trade-in, or "Two New" initiatives.

Large-scale equipment renewals have significantly contributed to China's investment growth, with equipment and tools investment rising 16.1% y-o-y in the first ten months, while the consumer goods trade-in policy led to a nearly 40% y-o-y increase in the sales of home appliances and audiovisual equipment in October, according to data from National Bureau of Statistics.

The consumer goods trade-in programme covers three key product categories, including automobiles, home appliances, and home furnishings, and the NDRC has directed RMB 150 billion in long-term special treasury bonds to support consumer purchases of higher-quality, smarter and more eco-friendly products.

The large-scale equipment renewal programme focuses on seven key sectors: industry, agriculture, construction, education, transportation, culture and tourism, and healthcare, and a total of RMB 150 billion in long-term special bonds has been allocated directly to projects in these sectors.

With these "Two New" initiatives, companies are encouraged to enhance their product upgrades to better meet consumer demand, and meanwhile, consumers are supported in increasing consumption, which, in turn, drives corporate investments and capacity expansion, which creates a virtuous cycle between investment and consumption, Li noted.

From January to October, China's nationwide investment in equipment grew by 16.1% y-o-y, contributing over 60% to overall investment growth.

The NDRC will continue to evaluate the effects of large-scale equipment renewal and consumer goods trade-in policies, and based on the evaluation, further measures will be introduced to enhance support and broaden their impact, ensuring these policies continue to benefit people, support businesses, and sustain economic growth, Li said.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.